Investor consortium calls on fast food to green up supply chain

Investor consortium calls on fast food to green up supply chain

A consortium of global investors representing more than $6.5 trillion is calling on the fast food giants to reduce carbon emissions and water usage of their meat and dairy suppliers.

The investors have sent letters to Domino’s Pizza, McDonald’s, Restaurant Brands International (owners of Burger King), Chipotle Mexican Grill, Wendy’s Co. and Yum! Brands (owners of KFC and Pizza Hut).

The letters, facilitated by the sustainability organisation Ceres and the FAIRR Initiative, ask companies to explain by March 2019 how they plan to enact meaningful policies and targets to de-risk their meat and dairy supply chains.

Jeremy Coller, Founder of FAIRR and Chief Investment Officer of Coller Capital said: “Every day around 84 million adults consume fast food in the US alone, but the inconvenient truth of convenience food is that the environmental impacts of the sector’s meat and dairy products have hit unsustainable levels.

“To put this in perspective, if cows were a country, it would be the world’s third largest emitter of greenhouse gases.

“Other high-emitting industries, such as cars or oil and gas, are beginning to set clear yet ambitious climate targets, making animal agriculture one of the world’s highest-emitting sectors without a low-carbon plan.

“A failure to tackle these major environmental problems in corporate supply chains puts the long-term financial sustainability of these household names under threat. Investors are calling for more strategic and innovative thinking to manage these risks.”

The letters call on the fast food companies to:

  • Adopt a supplier policy with clear requirements for suppliers of animal protein products to report and reduce greenhouse gas (GHG) emissions and freshwater impacts.
  • Publish quantitative, time-bound targets to reduce the GHG emissions and freshwater impacts of their own meat and dairy supply chains.
  • Commit to publicly disclose progress on these targets annually.
  • Undertake a climate scenario analysis in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Fast food’s environmental footprint

A new investor briefing from FAIRR highlights the environmental impact of the meat and dairy producers that supply the fast food sector.

Agricultural emissions, including those from meat and dairy, are on track to contribute  around 70% of total allowable GHG emissions by 2050.

This will create an 11-gigaton GHG mitigation gap between projected emissions and the target level required to keep global warming under a 2°C threshold.

The livestock sector is also estimated to use approximately 10% of annual global water flows.

The investor letter highlights that the meat and dairy industry currently has limited water and climate policies and goals in place.

Analysis by the Coller FAIRR Index found that more than 70% of meat and livestock index companies do not have targets for reducing GHG emissions.

The meat sector was also shown to be the lowest performing industry in Feeding Ourselves Thirsty, a 2017 analysis of water management practices released by Ceres, and is a major source of nitrogen and phosphorus pollution globally.